The first assumption is that by "compressed files," what is referred to is "lossy" compressed files, not data compressed files. The idea, I think, is to have lossy files open as 32 bit floating (if desired).

As you say, it doesn't work for MP3's - they open as 16 bit. It also does not work for the .m4a AAC lossy files - they open as 16 bit.

So the preference does not work. It's a simple matter of course, to select 32 bit depth and continue processing, but that's not the point of the preference.

Apple Lossless in the .m4a wrapper is not "lossy," therefore the preference choice is irrelevant, and the file opens as it was saved.